from the no,-really,-really,-really dept

Officials in Antigua are now trying to draw a line in the sand, claiming that if the US doesn't finally agree to allow some forms of online gambling by the end of this month, it will go ahead with its threats to ignore US copyrights with the approval of the WTO. As you may recall, back in December, the WTO granted Antigua that right, after a loooooooong series of battles with the US over whether or not the US was violating free trade agreements by banning online gambling. Of course, every time the WTO sided with Antigua, the US would stall, claim the WTO sided with the US (when it clearly did not) and (my personal favorite) claim that even if it had broken trade agreements, it didn't matter any more because the US was unilaterally changing its trade agreements so that it was no longer violating them.

Of course, when Antigua won the final decision in December, allowing the country to ignore US intellectual property rights, the US government and the entertainment industry quickly warned Antigua not to follow through on those plans -- but the US government still won't shift in its position on the matter. Thus, Antigua is agitating to get this show on the road. While it first needs to get one last permission slip from the WTO, once that's in place, it can start ignoring the copyright on American movies and music. Of course, while some are suggesting that it may make sense for The Pirate Bay to move to Antigua, that's not accurate. After all, the WTO has said that Antigua can only violate $21 million worth of intellectual property, and with the way the entertainment industry counts damages, that's like half an album or so.

In fact, that seems to be exactly the angle that the entertainment industry is taking in this fight. An MPAA letter warning: "The proposed retaliation would be impossible to manage. The real and resulting economic harm would vastly exceed any amount the (WTO) might approve, even the grossly exaggerated amount ($3.4 billion) for which Antigua seeks approval, plus the economic harm would extend to other WTO members."

from the poetic-justice dept

My Cato colleague Sallie James describes the ongoing standoff between the US and the rest of the world at the World Trade Organization over gambling. When Congress banned online gambling, tiny Antigua filed a complaint alleging that the actions violated WTO rules. Antigua won, but the United States has so far bullied them out of taking advantage of their victory. The US has threatened to retaliate against Antigua if the latter begins targeting US copyrights as authorized in the trade ruling. James says that the United States is in the process of negotiating alternative compensation, including increased access to other American services markets. If that deal falls through, she warns, Hollywood might find itself "footing the bill" for the US government's ill-conceived gambling ban.

I certainly agree with her that the gambling ban was a bad idea, but I'm not sure it makes sense to paint Hollywood as an innocent victim here. After all, Hollywood has been pushing for decades to link trade policy and copyright law, going so far as to support free-trade agreements that include terms micro-managing other countries' copyright policies and requiring them to enact laws like the DMCA as a condition of access to American markets. Free traders rightly object when special interests try to use free trade agreements as a way to coerce countries into enacting their preferred labor and environmental policies. We should be equally incensed when Hollywood lobbies for the use of trade agreements to coerce countries into enacting their preferred copyright policies. So there's a certain amount of poetic justice in the fact that Hollywood has found its copyrights in the crosshairs of a trade dispute. James also correctly notes that retaliatory tarriffs are an insane way to impose damages on the losing country in a WTO dispute because tariffs hurt consumers in the "winning" country at the same time it hurts producers in the "losing" country. In contrast, if damages are imposed by targeting copyright law, consumers in the winning country will actually be made better off by lower prices for the copyrighted products in question. So while it would be best of Congress repealed its idiotic gambling ban, I'm not going too upset if Hollywood's attempts to link copyright law to trade policy come back to bite them.

from the this-ain't-over-yet dept

The battle between the US and Antigua over online gambling is rather long. You can go back here to read a summary of the back and forth -- but the quick version is that the US violated its own free trade agreements by banning some forms of online gambling (while allowing others). Antigua, home to many online gambling firms, filed a complaint with the WTO. The WTO repeatedly sided with Antigua, and the US repeatedly ignored those rulings, before the US eventually unilaterally claimed that it had changed its trade agreement so that online gambling wasn't covered. In response, Antigua (with very little power) started pushing for a different kind of sanction against the US: it asked to be allowed to violate intellectual property of US firms, including copyrights, patents and trademarks. Antigua didn't really want that to happen -- it wanted to use that to put pressure on the US to back down and allow online gambling. A bunch of other countries started siding with Antigua until the US bought them off, leaving Antigua and a few other small countries fighting the US at the WTO.

Today the WTO came down with its final (no, this time they swear, it's final, dammit!) ruling, saying (again) that the US definitely did violate trade agreements, but that Antigua is only entitled to $21 million. The WTO did allow Antigua to target US copyrights in order to make up that amount, but the way folks like the RIAA "count" the value of copyright, $21 million is, what, like 10 songs? This is obviously far short of what Antigua was hoping for. You would think that the US might just pay off the $21 million and be done with it... but that would only be if you didn't recognize the way our government worked. Instead, even though there's no appealing the WTO's decision, the US is already warning Antigua not to put in place any sanctions based on this ruling. The US claims that it's in the process of "revising its commitments" with regards to its trade agreements and that Antigua should wait until those revisions are complete before it thinks about putting in place sanctions. While Antigua "wins" again, the reality here is that the US appears to have bullied its way into the real winning position.

from the who-does-this-help? dept

On Tuesday, we wrote about how the US was paying off the EU, Japan and Canada over a trade dispute around online gambling. The real point was to get these three to back off from putting pressure on the US to abide by free trade agreements, which effectively required the US to allow online gambling as long as it was hosted in other countries. It's quite a shame that these countries basically accepted money to let the US get out of agreements it had made -- and many are beginning to point out how ridiculous the whole situation is, and how it's likely to harm future US trade agreements around the world. All for the sake of preventing people from being able to play a little online poker.

Related to this, bankers and bank lobbyists are trying to explain to US politicians that upcoming rules concerning online gambling are impossible to abide by. As you may recall, back in October, the US approved new legislation that would put the liability on banks to prevent money from being used for online gambling. Beyond the ridiculousness of trying to stop people from gambling online if they choose to do so, this particular law means that banks need to figure out what money is being used for online gambling and try to prevent such uses. How? Politicians don't bother to go that far. Meanwhile, I hear that the gov't continues to make good money from state lotteries...

from the so-much-for-that-plan dept

For quite some time now, we've covered the ongoing dispute between the US and Antigua over the fact that the US's ban on online gambling violates free trade agreements between the two countries. While the US has tried to unilaterally change those agreement to keep gambling out, the WTO has repeatedly made it clear that the US was at fault (even though the US has pretended otherwise). Either way, the US knew that it could simply ignore Antigua, as the tiny country couldn't do much to hurt it (even if it moved forward on its plan to become a piracy haven for digital content. However, earlier this year, there were rumblings that the EU would get involved on Antigua's side, putting a lot more pressure on the US. However, it appears that US politicians and diplomats made quick work of that signing new agreements with the EU, Canada and Japan to keep those three out of the way, leaving the dispute between the US and Antigua, with much less powerful countries like Costa Rica and Macau backing Antigua's position. Not surprisingly, online gambling firms in the EU aren't pleased that the powers that be in the EU rolled over like this -- and neither are folks in the US who still don't understand why it's okay for them to buy a lottery ticket, but they can't play a little poker online.

from the what-a-waste-of-diplomatic-time dept

We recently wrote about how the US gov't has been saying repeatedly that it won't let Russia into the WTO if Allofmp3 comes back to life. This does seem rather ridiculous for a variety of reasons. After all, within Russia, the company has been found to be legal. And, secondly, it's not as if the US is in the WTO's good graces after ignoring the WTO's ruling on online gambling. If the WTO really wanted to punish the US for ignoring that issue, why not ignore the US's pleas to keep Russia out of the WTO itself? In the meantime, there's a bizarre statement in an article discussing Rep. Howard Berman once again saying that Russia needs to stop Allofmp3.com if it wants into the WTO. The article discusses how Russia has been slowly changing its laws following all this pressure from the US, and under the new laws, Allofmp3 may now be considered illegal. Yet, rather than focus on how it was the change of laws that made a previously legal service suddenly illegal, the article notes that "those legal changes could confirm what record companies have believed all along--that the Russian music stores are illegal." That seems rather bizarre, doesn't it? If the law gets changed, that doesn't confirm what's been said all along at all. It actually confirms the opposite. That the services were perfectly legal until a bunch of protectionist politicians who represent districts where the entertainment industry is based, bullied a foreign country into changing its laws to protect outdated business models.

from the your-attention-please... dept

We've covered the long and detailed saga of Antigua fighting the US via the WTO, but the short summary is this: Antigua claims that the US is violating a free trade agreement in banning online gambling (many online gambling firms are in Antigua). The WTO agreed with Antigua and the US proceeded to ignore the ruling. The WTO again sided with Antigua... and the US pretended the WTO had sided with the US... and again ignored the ruling. This has happened a few more times, with the US eventually unilaterally changing the terms of the free trade agreement -- which didn't satisfy either the WTO or Antigua. Of course, with Antigua being such a small country there has been little in the way of ramifications for the US for ignoring the ruling. That's why Antigua is now pushing for the right to ignore US copyrights and patents as a remedy. However, there may be an even more persuasive remedy. Back over the summer, the EU indicated that it might start siding with Antigua in the dispute -- and it's a lot more difficult for the US to simply ignore the EU. To make the situation even more fun, the latest news is that gambling firms in the EU are pushing for $100 billion in damages from the US. That's certainly an unlikely number, but it's going to get plenty of attention either way. If the EU (and Japan, apparently) really do take Antigua's side in this, the US may finally be forced to acknowledge that it lost. However, it still seems quite unlikely that it will stop the ban on online gambling any time soon.

from the something-seems-wrong-here... dept

With Allofmp3.com announcing that it plans to reopen the site now that (once again) the site has been found to be legal under Russian laws, it didn't take long for the RIAA... er... U.S. government to make its unhappiness clear. A spokesman for the U.S. Trade Representative has announced that if Allofmp3.com reopens, then Russia has kissed away its chance to join the WTO. This isn't all that surprising, given that the U.S. (at the urging of the RIAA) threatened Russia that it would keep the nation out of the WTO unless it shut down Allofmp3.com. Of course, it doesn't make much sense either. This is a private dispute between private entities. It doesn't seem reasonable for the US gov't to be getting involved. Secondly, as should now be quite clear, Allofmp3.com is operating legally under Russian laws. So it hasn't done anything wrong either. Just because some companies in the US don't like the fact that Allofmp3 has come up with a business model that customers actually like, it doesn't mean that the US gov't should ban Russia from the WTO. And, of course, this doesn't even begin to get into how ridiculous it is that the business model of a single small company should be the key factor in whether or not an entire country is allowed into the WTO. In the meantime, given how often the US has been ignoring the WTO over the Antigua online gambling case, perhaps the WTO should simply ignore the US on this one.